- The WTI oil price is experiencing significant volatility as traders evaluate a series of executive orders issued by President Trump.
- Trump plans to impose 25% tariffs on Canadian imports, raising the risks of higher costs for most of Canada’s oil exports.
- US President Donald Trump has repealed actions taken by former President Joe Biden to restrict oil drilling.
The West Texas Intermediate (WTI) oil price ended a three-day streak of losses, holding steady near $76.20 during European trading hours on Tuesday. Crude oil markets experienced significant volatility as traders evaluated a series of executive orders issued by US President Donald Trump shortly after his inauguration.
One of the key measures included a plan to impose 25% tariffs on imports from Canada and Mexico starting February 1, disappointing investors who had expected a delay in implementation. Crude oil prices gained momentum as proposed tariffs on Canadian crude oil imports were seen as a possible driver of higher prices in the market.
Canada exports almost all of its crude oil to the United States (US), often at a discount to WTI. “US sanctions therefore increase the risk of higher costs for most of Canada’s oil exports,” Commonwealth Bank analyst Vivek Dhar said in a report, according to Reuters.
Former President Donald Trump refrained from announcing specific tariffs on China, the world’s largest oil importer, leaving markets uncertain. Traders are keeping an eye on developments in tariff policies, as Trump previously threatened China with tariffs of up to 60% in December.
At the same time, concerns about a possible increase in US oil production were high, fueled by Trump’s “drill, baby, drill” agenda. On Monday, Trump unveiled an ambitious plan to speed up the permitting process for oil, gas and energy projects, with the goal of boosting already record-high U.S. energy production.
One of Trump’s executive orders on his first day in office repealed actions taken by former President Joe Biden to restrict oil drilling. Trump reversed Biden’s ban on oil drilling in the Arctic and along large areas of the US coast.
According to the White House, Trump also rescinded a 2023 memo that had banned oil drilling on 16 million acres (6.5 million hectares) in the Arctic. These moves signaled a dramatic policy shift and highlighted the administration’s commitment to maximizing domestic energy production.
WTI Oil FAQs
WTI oil is a type of crude oil that is sold in international markets. WTI stands for West Texas Intermediate, one of the three main types that include Brent and Dubai crude. WTI is also known as “light” and “sweet” for its relatively low gravity and sulfur content, respectively. It is considered a high-quality oil that is easily refined. It is sourced in the United States and distributed through the Cushing facility, considered “the pipeline junction of the world.” It is a benchmark for the oil market and the price of WTI is frequently quoted in the media.
Like all assets, supply and demand are the main factors that determine the price of WTI oil. As such, global growth can be a driver of increased demand and vice versa in the case of weak global growth. Political instability, wars and sanctions can alter supply and impact prices. The decisions of OPEC, a group of large oil-producing countries, is another key price factor. The value of the US Dollar influences the price of WTI crude oil, as oil is primarily traded in US dollars, so a weaker Dollar can make oil more affordable and vice versa.
Weekly oil inventory reports published by the American Petroleum Institute (API) and the Energy Information Agency (EIA) influence the price of WTI oil. Changes in inventories reflect the fluctuation of supply and demand. If the data shows a decline in inventories, it may indicate an increase in demand, which would drive up the price of oil. An increase in inventories can reflect an increase in supply, which drives down prices. The API report is published every Tuesday and the EIA report the next day. Their results are usually similar, with a difference of 1% between them 75% of the time. EIA data is considered more reliable since it is a government agency.
OPEC (Organization of the Petroleum Exporting Countries) is a group of 13 oil-producing nations that collectively decide member countries’ production quotas at biannual meetings. Their decisions often influence WTI oil prices. When OPEC decides to reduce quotas, it can restrict supply and drive up oil prices. When OPEC increases production, the opposite effect occurs. OPEC+ is an expanded group that includes ten other non-OPEC member countries, including Russia.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
